Lere Olayinka, Senior Special Assistant to Nyesom Wike, the Minister of the Federal Capital Territory (FCT), recently expressed support for a proposal regarding the distribution of Value Added Tax (VAT) based on consumption patterns.
- Olayinka argued that states that prohibit the consumption of alcohol should not receive a share of VAT generated from alcohol sales in other states.
- His comments come amid ongoing discussions about tax reforms in Nigeria, particularly concerning how VAT is currently allocated among the 36 states.
- He emphasized that it is unjust for states that do not allow alcohol consumption to benefit from taxes collected on alcoholic beverages sold in states where such consumption is permitted.
- This stance aligns with broader calls for a more equitable distribution of tax revenues, particularly as many states feel marginalized by the existing VAT sharing formula.
- According to Olayinka’s tweet, “I support that VAT should be shared based on consumption. For instance, a state that prohibited consumption of ALCOHOL must not share from VAT generated from consumption of the same alcohol in other states.”
- The current VAT distribution system has been criticized for disproportionately favoring states like Lagos, Rivers, and the Federal Capital Territory, which host most corporate headquarters and generate significant tax revenue, according to recent data from the Federal Inland Revenue Service (FIRS).
